Murdoch Defiant as FBI Acts

U.S. to Probe 9/11 Claim; News Corp. CEO to Face U.K. Panel

WSJ's Cassell Bryan-Low reports Rebekah Brooks, head of News Corp's UK newpsapers unit, will appear before a U.K. parliamentary committee to answer questions about the phone-hacking scandal. News Corp. is the parent company of The Wall Street Journal.

By

Bruce Orwall,

Cassell Bryan-Low,

Devlin Barrett and

Jessica E. Vascellaro

July 15, 2011

LONDON—News Corp. Chairman and Chief Executive Rupert Murdoch and one of his sons agreed to testify at a parliamentary hearing next week to answer questions about the company's phone-hacking scandal.

Across the Atlantic, the Federal Bureau of Investigation said it would open a probe at the request of a New York congressman. At issue: whether the British tabloid at the center of the controversy might have hacked into phones of 9/11 victims. Such an allegation was made in the Daily Mirror, a U.K. tabloid.

In Today's News

Rupert Murdoch and his son James said they will appear before a parliamentary panel for questioning on Tuesday.

A former editor of the now-closed News of the World was arrested in London, becoming the ninth arrest this year in the re-opened investigation.

The FBI said it would probe allegations that the U.K. tabloid might have hacked phones of 9/11 victims and their families.

Mr. Murdoch at first declined to appear before the committee next Tuesday, but he said he relented when told he would be summoned by Parliament.

In an interview with The Wall Street Journal late Thursday, he said he wanted to address "some of the things that have been said in Parliament, some of which are total lies. We think it's important to absolutely establish our integrity in the eyes of the public. ...I felt that it's best just to be as transparent as possible."

In London next week, Mr. Murdoch, along with son James, who is deputy chief operating officer of News Corp., and Rebekah Brooks, CEO of News International, the U.K. newspapers division, are expected to face tough questioning at the high-profile parliamentary hearing. The three won't be under oath.

Key Players

The committee plans to focus on whether News International executives have misled the committee during previous appearances.

The six-year saga stems from dubious reporting tactics at the News of the World tabloid in the U.K. The controversy has cost the company much of its political support in Britain and prompted it to both shutter the paper and abandon one of its biggest deals ever—its multibillion-dollar attempt to take full control of pay-TV company British Sky Broadcasting Group PLC.

Mr. Murdoch said the company had handled the crisis "extremely well in every way possible," making just "minor mistakes." He asserted, however, that a London law firm the company initially hired to investigate, Hartbottle & Lewis LLP, had made a "major mistake" in underestimating the scope of the problem.

Harbottle & Lewis's managing partner, Glen Atchison, said: "We are unable to comment substantively at this time as the matters raised are the subject of an ongoing investigation by the Metropolitan Police. Moreover, it is not our usual practice to comment on our clients' affairs or advice which we may or may not have provided."

In the U.S., the FBI opened a probe into whether employees of News Corp. might have hacked or attempted to hack into the private calls, voice-mail messages or call records of 9/11 victims or their families, according to people familiar with the investigation. The probe was opened Thursday morning, following a request a day earlier by Rep. Peter King (R., N.Y.), who heads the House Homeland Security Committee and whose Long Island district was home to many victims of the 2001 terrorist attacks.

It will also look into whether any News Corp. employees bribed or sought to bribe police officials to gain access to such records.

ENLARGE

Rupert Murdoch

An FBI spokesman declined to comment.

A handful of other U.S. lawmakers have this week called for probes, asking the Justice Department, Securities and Exchange Commission and the Federal Bureau of Investigation to examine whether anyone at the company violated antibribery or wiretapping laws.

Tracy Schmaler, a spokeswoman for the Justice Department, said the agency "does not comment specifically on investigations, though anytime we see evidence of wrongdoing, we take appropriate action. The department has received letters from several members of Congress regarding allegations related to News Corp. and we're reviewing those.''

Current and former News Corp. executives have appeared before the parliamentary committee on two occasions. Les Hinton, a longtime top aide to Rupert Murdoch who headed News International when the phone-hacking problem first arose, told the committee in 2007 and 2009 that the company had carried out a full investigation into the matter and was convinced that just one of the company's journalists was involved. Mr. Hinton is chief executive of Dow Jones & Co., the News Corp. unit that publishes The Wall Street Journal.

The FBI is investigating whether employees of News Corp. might have hacked or attempted to hack into the phones of Sept. 11 victims and their families. Devlin Barrett has details.

James Murdoch said last week that the News of the World tabloid and News International had failed to "get to the bottom of repeated wrongdoing that occurred" and, as a result, "wrongly maintained that these issues were confined to one reporter." The company recently handed evidence to police that he believed "will prove that this is untrue," he said.

In the interview, Mr. Murdoch said damage from the crisis was "nothing that will not be recovered. We have a reputation of great good works in this country." He conceded, however, that he was "getting annoyed. ...I'll get over it. I'm tired."

The 80-year-old Mr. Murdoch called The Wall Street Journal late Thursday in response to inquiries about the status of James Murdoch, who is also nonexecutive chairman of BSkyB. The younger Mr. Murdoch played a central role in the proposed deal.

The elder Mr. Murdoch said his son's position in News Corp. is unchanged, and that he wasn't aware of any consideration his son might be giving to leaving the BSkyB chairmanship. A spokesman for James Murdoch also said he plans to remain in the position.

While James Murdoch has been criticized for responding too slowly to the crisis, his father said: "I think he acted as fast as he could, the moment he could."

Mr. Murdoch said he, too, had acted appropriately and quickly to the crisis. "When I hear something going wrong," he said, "I insist on it being put right." He added, however, that he attends to a lot of details in a multibillion-dollar company with thousands of employees.

ENLARGE

James Murdoch

The BSkyB deal had been designed to boost News Corp.'s exposure to the lucrative and steady pay-TV business, as the company's newspaper holdings come under pressure from declines in readership and ad revenue. Now that the deal has been abandoned, Mr. Murdoch said the company is "buying back shares and looking for better places to put our money."

People close to the company have said it has considered a separation or sale of its newspaper assets. But Mr. Murdoch, who is famously devoted to the newspaper business, called such reports "pure rubbish. Pure and total rubbish....give it the strongest possible denial you can give."

On Thursday police arrested another former senior News of the World editor, bringing to nine the total number of arrests this year in connection with the scandal. Metropolitan Police, known as Scotland Yard, didn't name the 60-year-old man arrested at a residential address in London on suspicion of conspiring to intercept voice mail messages.According to a person familiar with the matter, the man arrested Thursday was Neil Wallis. He remained in custody as of midday Thursday and hadn't been charged.

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Mr. Murdoch singled out former British Prime Minster Gordon Brown, who in recent days claimed his phone and other information had been obtained illicitly by reporters across News International, including not just News of the World but also the Sunday Times.

"He got it entirely wrong," Mr. Murdoch said, adding that "the Browns were always friends of ours" until the company's Sun tabloiod withdrew its support for the Labour Party before the last election.

Mr. Murdoch said the company will establish a new independent committee, to be led by a "distinguished non-employee," that will "investigate every charge of improper conduct." In addition to looking at charges of impropriety against the company, it will also put together a "protocol for behavior" for new reporters across the company.

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